The advisory group Pirc has called for investors to vote down Severn Trent's
remuneration policy at the chief executive's first annual meeting

Liv Garfield, chief executive of Severn Trent, is the latest FTSE boss to face a pay row as shareholders have been urged to vote down the water company’s remuneration policy.

Pensions & Investment Research Consultants (Pirc) has issued a note warning investors that the pay policies designed for the new chief executive are “considered to be excessive.”

The investor group, which advises a raft of influential pension funds and institutional investors, has criticised Severn Trent’s long-term incentive plan which has been boosted for the arrival of Ms Garfield.

The executive directors’ total potential rewards under all incentive schemes are considered to be excessive,” Pirc has said in a note. “Awards granted have previously been capped at 70pc of salary for the chief executive and 50pc for other executives. However, these have been greatly increased to 125pc for the newly appointed CEO and 80pc of salary for other executives.”

Ms Garfield, who became the youngest ever female chief executive when she was hired by Severn Trent, faces her first annual meeting at the head of the water company on Wednesday. The water boss is already under intense political scrutiny because of the sensitivity of rising utility bills. So far the heat has been on electricity and gas suppliers but water companies have been criticised too. Ms Garfield’s basic salary of £650,000 a year is 16pc higher than her predecessor, Tony Wray. The former boss of BT Openreach was also awarded £2.4m in shares when she joined Severn Trent, on top of annual pay and pensions, to compensate for the loss of long-term share awards at the telecoms giant.

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Severn Trent has also designed a new long-term incentive plan to replace the scheme that expires this month. The 10-year plan has also been criticised by Pirc for not being “sufficiently long-term” and also for allowing directors the ability to amend performance conditions without shareholder approval.

Institutional investors have been flexing their muscles over company pay policies. On Friday, Burberry was dealt a bloody nose when chief executive Christopher Bailey’s multi-million pound pay package was voted down by investors. Almost 53pc of investor votes were against Burberry’s remuneration report at the company’s annual meeting, making it only the sixth FTSE 100 business to have its pay package voted down by shareholders in the last decade

First Group also faces a backlash at its annual meeting this week. Three influential investor advisory bodies have flagged concerns following an 86pc leap in chief executive Tim O’Toole’s pay package last year. Pirc has been joined by Institutional Voting Information Service (IVIS), which used to be run by the ABI, and ISS, the US group, in calling for investors to vote against the transport group’s remuneration policy.